Amid rising tensions with Baghdad, Iraq's self-ruling Kurds elect a parliament and president tomorrow following an unusually vigorous campaign in which a new reform movement has challenged the long supremacy of the elite.

The results will be closely watched by the government in Baghdad with whom the Kurds are engaged in bitter disputes over the distribution of power, territory and resources – solutions to which are seen as key to the country's long-term stability. Turkey, Iran and Syria, each with significant Kurdish populations of their own, will also take notice.

Some two and a half million voters will choose between 24 party lists to fill 111 seats in the regional assembly in Erbil. Under a quota system, 30% of the MPs will be women. Eleven seats are set aside for minorities such as Turkomans and Christians.

A separate ballot will directly elect a president for the Kurdistan region. The incumbent, Massoud Barzani, who is head of the Kurdistan Democratic party, is expected to comfortably beat his four rivals.

But it is the parliamentary race that has caused the greater stir, with debates over poor services, the lack of transparency and corruption foremost.

The big beasts of Kurdish politics, Barzani's KDP and the Patriotic Union of Kurdistan, which is led by Jalal Talabani, the Iraqi president, face a serious challenge for the first time since self-rule was established 18 years ago. Despite maintaining security and improving infrastructure, the coalition partners stand accused of allowing corruption, cronyism and nepotism to take root.

Enter Goran, (the Kurdish word for change), a reform movement inspired by the presidential campaign of Barack Obama. Its supporters' chants of "We will change it" have been heard at rallies across Kurdistan, tapping into the broad public antipathy towards the old Kurdish establishment.

Change has put up a slate of candidates for the elections and though not expected to beat the KDP-PUK alliance, it may gain sufficient seats to form a serious opposition. It may also go on to fight in the elections for the federal parliament in Baghdad next January, splitting the powerful Kurdish bloc.

The message that "change is on its way" has resonated across the mountainous region, especially with younger Kurds, said Hiwa Osman, Iraq director of the Institute for War and Peace Reporting.

"Its use of Kurdish rap music – a relatively new phenomenon here – and street parties has contrasted sharply with broadcasts for the ruling Kurdistan list, which stress bravery and courage and the past Kurdish struggles against Saddam Hussein in the mountains, all set to the theme tune for Gladiator," said Osman.

It is a surprise therefore that the movement's leader is an establishment veteran, Nawshirwan Mustafa. For years he was the PUK's number two. But Mustafa, 65, broke with Talabani two years ago, criticising the debilitating system of mismanagement and corruption that was failing the Kurdish people.

Mustafa spreads Change's message via a daily newspaper, a popular website and a satellite TV station. He said he wanted to clean up Kurdish politics and "stop the KDP and PUK from interfering in all aspects of public life".

In Sulaymaniyah, where Change was born, its symbol of an orange-flamed candle on a deep blue background has appeared on the sides of buses and taxis, on T-shirts, baseball caps, and balloons. At night thousands of flag-waving supporters take to the streets.

"The emergence of Change has energised elections here like never before," said Assos Hadi, the editor in chief of Awene newspaper. "Before, the Kurdish political scene was like a lake, with a few ripples here and there. Now it is like an ocean, with raging currents."

A western diplomatic observer said: "Change made an impressive start to the election campaign but in recent weeks, the Kurdistan list has got its act together and come back hard at them."

Private polling carried out by the Kurdistan alliance in the final days of the campaign suggested the Kurdistan list was ahead with 56% support, followed by Change with 14%, and a grouping of moderate Islamist parties and two secular parties third at 9%. However, the number of undecided/don't knows was a surprisingly high 20%.